Young American Workers

The past 5 years have been rather disastrous for America's workers but one group has suffered more than others, particularly over the period between 2000 and 2010.  A recent study by Andrew Sum et al at the Brookings Institute sheds light at the predicament shared by millions of unemployed and underemployed Americans during the "Lost Decade" when, for the first time since World War II, the economy had less jobs at the beginning of the decade than it had at the end.

The authors of the study used data from the monthly Current Population Survey (CPS) provided by the U.S. Census Bureau, the annual March CPS supplements and the American Community Surveys which provide the demographic variables that can be used to predict the probability of an individual's employment status.  The data for the country's 100 largest metropolitan areas was used to produce labor market outcomes in both 2000 and 2011.

Here are some of the key findings of the study starting with teenagers between the ages of 16 and 19 and comparing them to the rest of the population:

1.) Overall, individuals under 54 years of age were less likely to be working in 2011 than they were in 2000 and individuals 55 years of age and older were more likely to be working in 2011 than they were in 2000.  The sharpest declines in those working were among teens and young adults between the ages of 16 to 19 and 20 to 24 respectively as shown on this graph:

In the case of 16 to 19 year olds, employment rates fell from 45 percent in 2000 to 26 percent in 2011, a 19 percentage point decline.  In the case of 20 to 24 year olds, employment rates fell from 72 percent in 2000 to 61 percent in 2011.  In contrast, employment rates for workers 55 years and older rose by between 2 and 6 percentage points depending on age.

2.) Teen unemployment and underemployment was far higher in 2011 than it was in 2000.  The unemployment rate for teens doubled from 13 to 25 percent over the period and under-utilization rose from 25 to 43 percent.  As shown on this pie chart, underemployed (i.e those who are working part-time but would prefer full-time employment) and hidden unemployed (i.e. those who want work but aren't actively looking) teens make up just over half of the 1.8 million under-utilized teens living in the 100 largest urban centres in the United States: 

In general, teen under-utilization rates were highest among high school dropouts, rising from 32 percent in 2000 to 57 percent in 2011 and among blacks, rising from 43 percent in 2000 to 60 percent in 2011.

Here is a chart showing the metropolitan areas with the highest and lowest teen employment rates:

Note how six out of ten of the lowest employment rate cities for teens are located in California?  The authors of the study do not address this issue although they do note that low teen employment rates are generally associated with areas that had larger populations of college-aged students, high school dropouts and more teens from low-income families.

Now, let's look at the key findings for young adults between the ages of 20 and 24:

1.) The overall employment rate for young adults fell from 72 percent in 2000 to 60 percent in 2011, a 12 percentage point decline as shown on this graph:

The biggest decline in employment was found in high school dropouts, falling from 61 percent in 2000 to 47 percent in 2011 and high school graduates whose employment rate fell from 78 percent in 2000 to 64 percent in 2011.  Those with a post-secondary school degree saw their employment rate drop only 6 percentage points between 2000 and 2011, from 89 percent to 83 percent, still well above their less-educated peers.

2.) Young adult unemployment and under-utilization was far higher in 2011 than it was in 2000.  The unemployment rate for young adults more than doubled from 7 percent to 15 percent as did under-utilization which rose from 14 percent to 29 percent.  As shown on this pie chart, underemployed and hidden unemployed young adults made up just over half of the 3 million under-utilized young adults living in the 100 largest urban centres in the United States:

In general, young adult under-utilization rates were highest among high school dropouts, rising from 25 percent in 2000 to 48 percent in 2011 and among blacks, rising from 24 percent in 2000 to 42 percent in 2011.

Here is a chart showing the metropolitan areas with the highest and lowest young adult employment rates:

As most of us have learned from our younger years, the jobs that we had back then, often determined and shaped the choices that we made for both additional education and careers.  Many studies show that employment history is a strong predictor of current employment.  The increase in the percentage of young Americans that find themselves either unemployed or under-utilized over the first part of the new millennium is very concerning since it will negatively impact their options and their ability to achieve independence.